TIMOTHY V. KASSOUNI, SBN 142907 R.S. RADFORD, SBN 137533 ...
JEFFREY F. KELLER (SBN 148005) CAREY G. BEEN …...26 27 28 JEFFREY F. KELLER (SBN 148005) CAREY G....
Transcript of JEFFREY F. KELLER (SBN 148005) CAREY G. BEEN …...26 27 28 JEFFREY F. KELLER (SBN 148005) CAREY G....
PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR FINAL
APPROVAL OF CLASS ACTION SETTLEMENT AGREEMENT Case No. 3:09-CV-05142-EMC
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JEFFREY F. KELLER (SBN 148005) CAREY G. BEEN (SBN 240996) KELLER GROVER, LLP 1965 Market Street San Francisco, California 94103 Telephone: (415) 543-1305 Facsimile: (415) 543-7861 [email protected] [email protected] JOHN G. JACOBS (PRO HAC VICE) BRYAN G. KOLTON (PRO HAC VICE) JACOBS KOLTON, CHTD. 122 South Michigan Avenue, Suite 1850 Chicago, Illinois 60603 Telephone: (312) 427-4000 Facsimile: (312) 427-1850 [email protected] [email protected] Attorneys for Plaintiff and the Class
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA MOHAMMAD KAZEMI, individually and on behalf of a class of similarly situated individuals, Plaintiff, v. PAYLESS SHOESOURCE, INC., a Missouri corporation, COLLECTIVE BRANDS, INC., a Delaware corporation, and VOICE-MAIL BROADCASTING CORPORATION d/b/a VOICE & MOBILE BROADCAST CORPORATION a/k/a VMBC, Defendants.
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
Case No. 3:09-CV-05142-EMC CLASS ACTION PLAINTIFF’S NOTICE OF
MOTION AND MOTION FOR
FINAL APPROVAL OF CLASS
ACTION SETTLEMENT
AGREEMENT; MEMORANDUM
OF POINTS AND AUTHORITIES
IN SUPPORT
Location: Courtroom 5, 17th Floor.
450 Golden Gate Avenue
San Francisco, California 94102
Date: March 23, 2012
Time: 1:30 p.m.
The Honorable Edward M. Chen
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PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR FINAL
APPROVAL OF CLASS ACTION SETTLEMENT AGREEMENT Case No. 3:09-CV-05142-EMC
NOTICE OF MOTION AND MOTION
PLEASE TAKE NOTICE that on March 23, 2012, at 1:30 p.m., or at such other time as
the Court may set, the undersigned will appear before the Honorable Edward M. Chen in
Courtroom 5, 17th Floor at the United States Courthouse at 450 Golden Gate Avenue, San
Francisco, California, and then and there move the Court, pursuant to Federal Rule of Civil
Procedure 23(e), to provide final approval of the proposed class action settlement in this matter.
Plaintiff makes this motion on the grounds that the settlement is fair, reasonable and
adequate. The Motion is based on this Notice of Motion and Memorandum of Points
and Authorities in Support Thereof, the declaration of the mediator, The Honorable Nicholas H.
Politan (ret.), the declarations of Class Counsel, the declaration of the Settlement Administrator,
oral argument of counsel, the complete file and record in this action, and such additional matters
as the Court may consider.
Dated: February 17, 2012 Respectfully Submitted,
MOHAMMAD KAZEMI, individually and on
behalf of a class of similarly situated individuals,
/s/ John G. Jacobs ______________
John G. Jacobs (Pro Hac Vice)
Bryan G. Kolton (Pro Hac Vice) JACOBS KOLTON, CHTD. 122 South Michigan Avenue Suite 1850 Chicago, Illinois 60603 Jeffrey F. Keller (SBN 148005) Carey G. Been (SBN 240996) KELLER GROVER, LLP 1965 Market Street San Francisco, California 94103
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PLAINTIFF’S MEMORANDUM IN SUPPORT OF FINAL
APPROVAL OF CLASS ACTION SETTLEMENT AGREEMENT Case No. 3:09-CV-05142-EMC
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MEMORANDUM OF POINTS AND AUTHORITIES IN
SUPPORT OF MOTION
Table of Contents
I. INTRODUCTION ............................................................................................................. 1
II. TERMS OF THE SETTLEMENT .................................................................................. x
III. THE CLASS NOTICE COMPORTS WITH DUE PROCESS AND RULE 23 ............................................................................................... x
IV. THE SETTLEMENT WARRANTS FINAL APPROVAL ........................................... x
A. The Strength Of The Plaintiffs’ Case .................................................................... x
B. The Risk Of Continued Litigation ......................................................................... x
C. The Risk Of Maintaining Class Action Status ...................................................... x
D. The Amount Offered In The Settlement ................................................................ x
E. The Extent Of Discovery Completed And The Stage Of The Litigation .............. x
F. The Experience And Opinion Of Counsel ............................................................. x
G. The Absence Of Collusion Supports Approval ...................................................... x
H. The Presence Of A Governmental Participant ...................................................... x
I. The Reaction of Class Members ............................................................................ x
V. CONCLUSION ................................................................................................................ 17
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PLAINTIFF’S MEMORANDUM IN SUPPORT OF FINAL
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Table of Authorities
Cases: Page(s):
Byrd v. Civil Serv. Comm’n,
459 U.S. 1217 (1983) .......................................................................................................... 8
Churchill Village, LLC v. Gen Elec.,
361 F.3d 566 (9th Cir. 2004) ..................................................................................... 6, 8, 17
Class Plaintiffs v. City of Seattle,
955 F.2d 1268 (9th
Cir. 1992) .............................................................................................. 8
Garner v. State Farm Mut. Auto. Ins. Co.,
2010 WL 1687832 (N.D. Cal. Apr. 22, 2010) .............................................. 8, 9, 12, 15, 16
In re Bluetooth Headset Products Liab. Litig.,
654 F.3d 935 (9th
Cir. 2011) .............................................................................................. 16
In re OmniVision Tech. Inc.,
559 F. Supp. 2d 1036 (N.D. Cal. 2008) ...................................................... 8, 12, 13, 14, 15
Kazemi v. Payless Shoesource, Inc.,
2010 WL 963225 (N.D. Cal. Mar. 16, 2010) ...................................................................... 9
Kent v. Hewlett-Packard Co.,No.
2011 WL 4403717 (N.D. Cal. Sept. 20, 2011) .................................................................. 17
Leckler v. Cashcall, Inc.,
2008 WL 5000528 (N.D. Cal. Nov. 21, 2008) .................................................................. 11
Lewis v. Starbucks Corp.,
2008 WL 4196690 (E.D. Cal. Sept. 11, 2008) .................................................................... 8
Lipuma v. Am. Express Co.,
406 F.Supp. 2d 1298 (S.D. Fla. 2005) ......................................................................... 12, 14
Molski v. Gleich,
318 F.3d 937 (9th Cir. 2003) ............................................................................................... 8
Mullane v. Central Hanover Bank & Trust Co.,
339 U.S. 306 (1950) ............................................................................................................ 6
Nat’l Rural Telecomms Coop. v. DIRECTV, Inc.,
221 F.R.D. 523 (C.D. Cal. 2004) ................................................................................ 15, 17
Officers for Justice v. Civil Serv. Comm’n,
688 F.2d 615 (9th Cir. 1982) ............................................................................................. 13
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PLAINTIFF’S MEMORANDUM IN SUPPORT OF FINAL
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Protective Comm. for Indep. Stockholders v. Anderson.,
390 U.S. 414 (1968) ............................................................................................................ 9
Rodriguez v. West Publishing Corp.,
563 F.3d 948 (9th
Cir. 2009) ........................................................................................ 15, 16
Satterfield v. Simon & Schuster,
569 F.3d 946, 950 (9th Cir. 2009) ....................................................................................... 9
Silber v. Mabon,
18 F.3d 1449 (9th Cir. 1994) ............................................................................................... 6
Wren v. RGIS Inventory Specialists,
2011 WL 1230826 (N.D. Cal. Apr. 1, 2011) .................................................................... 17
Statutes & Regulations:
28 U.S.C. § 2342 ............................................................................................................... 11
28 U.S.C. § 1715 ............................................................................................................... 16
47 U.S.C. § 227 et seq. ................................................................................ 1, 9, 10, 12, 14
47 C.F.R. § 64.1200 ............................................................................................................ 3
47 C.F.R. § 1200(f)(1). ..................................................................................................... 10
Miscellaneous:
Fed. R. Civ. P. 23(c)(1)(C) ................................................................................................ 13
Fed. R. Civ. P. 23(c)(2)(B) .............................................................................................. 6, 7
Fed. R. Civ. P. 23(e)(1) ....................................................................................................... 5
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PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR FINAL
APPROVAL OF CLASS ACTION SETTLEMENT AGREEMENT Case No. 3:09-CV-05142-EMC
I. INTRODUCTION
In October 2009, Plaintiff initiated this class action asserting that the text-message
marketing campaign employed by Defendants to promote the sales of Payless’s shoe lines to
millions of consumers nationwide constituted a violation of the Telephone Consumer Protection
Act (“TCPA”), 47 U.S.C. § 227 et seq. (See Docket Number (“Dkt. No.” 1). Plaintiff alleged that
Defendants utilized an “automatic telephone dialing system” (“ATDS”) to send text message
advertisements to the cell phones of consumers who had not previously given their "prior express
consent" to such text messages, some of whom had their telephone numbers registered on Do Not
Call lists, and sought injunctive relief and statutory damages. (Id.) In response, Defendants
moved to dismiss. (Dkt. No. 20) After lengthy briefing and argument, the Court denied the
Defendants’ Motion to Dismiss (Dkt. No. 36) and Defendants answered the Complaint. (Dkt. No.
35) The Parties then commenced discovery, but also agreed to try resolving the dispute through
mediation under the supervision of Judge Nicholas H. Politan (ret.). The Parties participated in
two full days of mediation, and at the conclusion of the second session, reached an agreement in
principle on the settlement of the lawsuit and executed a memorandum of understanding at that
time. (Jacobs Fee Decl.1 ¶ ¶ 13-16.) A few months later, a formal settlement agreement was
executed. (Id. ¶ 17.)
Following presentation of the settlement agreement to the Court (Dkt. No. 53), Judge Patel
requested supplemental briefing on specified points, which the Parties supplied (Dkt. Nos. 61 and
63). Following transfer to Judge Chen, additional briefing was requested and supplied by the
Parties (Dkt. Nos. 70 and 72), a corrected Settlement Agreement was filed with the Court (Dkt No.
71), and a hearing was held on August 19, 2011 (Dkt. No. 74), followed by the filing of a second
corrected Settlement Agreement with the Court. (Dkt. No. 75) On September 6, 2011, the Court
1 In connection with the Motion For Approval Of Attorneys’ Fees And Expenses And Class
Representative Incentive Award (Docket No. 79), class counsel John G. Jacobs attached his
Declaration. That declaration, dated October 13, 2011, is referred to herein as “Jacobs Fee Decl.”
In connection with the instant motion for final approval of the settlement, Mr. Jacobs has
submitted a second declaration (attached hereto), referred to herein as “Jacobs Final App. Decl.”
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granted preliminarily approval of the settlement, certified the Settlement Class, approved the
manner and form of notice to the class, directed the Parties to implement the notice plan giving an
opportunity for class members to opt out of the settlement or object to any of its terms (including
attorneys’ fees and expenses or incentive awards to the representative plaintiff, all of which were
clearly disclosed), and set a date for the final approval hearing. (Dkt. No. 76.) On October 13,
2011, Class Counsel filed their Motion For Award of Attorneys' Fees And Expenses and Class
Representative Incentive Award. (Dkt. No. 79.) Class Counsel thereafter worked with Payless
and the settlement administrator, Heffler, Radetich & Saitta LLP of Philadelphia, Pennsylvania, to
ensure that notice was properly distributed, fielded inquires from class members regarding
settlement details and aided class members in the claims process. (Jacobs Fin. App. Decl. ¶ 3.)2
On February 10, 2012, the Parties filed a stipulation to continue the hearing date for final approval
to March 23, 2012 to accommodate the travel needs of defense counsel (Dkt. No. 82), which the
Court signed into Order on February 14, 2012. (Dkt. No. 83). Pursuant to that Order, the new
hearing date was posted on the settlement website maintained by the Settlement Administrator,
www.paylesstextsettlement.com, and Payless restored the link on its own website,
www.payless.com, directing class members to the settlement website where the first item listed is
a prominent notice of the change of the final approval hearing date. (Hamer Decl. ¶ 6); (Jacobs
Final App. Decl. ¶11.)
The court-approved five-part notice plan has now been successfully implemented, CAFA
notice has been provided to various governmental agencies, and a press release announcing the
settlement has been issued by Class Counsel reminding class members of the filing deadline.
(Jacobs Final App. Decl. ¶¶ 3-6, 14 .) The deadline for submitting exclusions and objections has
now passed and given the terms of the settlement, it is not surprising that there has been not a
2 Detailed descriptions of the litigation history, which for efficiency will not be repeated here, have been summarized
in Plaintiff’s Motion for Preliminary Approval (Dkt. No. 53) and Motion For Award of Attorneys' Fees and Expenses
(Docket No. 79).
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single objection to the settlement and only one opt-out. (Jacobs Decl. ¶ 14; Hamer Decl. ¶ 9.)
Furthermore, over 22,500 claims have been filed. (Hamer Decl. ¶ 8.)
As a result of this settlement, every settlement class member obtains the relief that he or
she will never again receive a text message from Payless (unless they want to, in which case they
will have to specifically text Payless and request receipt of such text offers, with what is known as
a double opt-in requirement). That alone makes the litigation a success. The Settlement directs
that Payless (a) not use any list of cell phone numbers it compiled prior to October 4, 20103 nor
select numbers off of any such list for the purpose of sending any text messages to such numbers;
(b) comply with the TCPA and Federal Communications Commission (“FCC”) regulations, 47
C.F.R. § 64.1200, as applicable to the sending of future SMS text messages; (c) require any entity
through whom it causes SMS text messages to be sent to customers to compare any number to
which it wishes to send a text message to Payless’s internal Do Not Call list and/or any other Do
Not Call list maintained by or on behalf of Payless, and to the listing of persons who have texted
Payless to stop before any text messages are sent; (d) not send or allow to be sent any further text
messages to a customer whose cellular telephone number appears on any such stop or Do Not Call
list, unless and until Payless obtains that customer’s prior express consent authorizing Payless to
resume sending the customer text messages; and (e) provide training to its affected personnel on
compliance with the requirements of the TCPA and the FCC regulations with respect to text
messaging. That relief alone is significant -- not only because the class will no longer be subjected
to the aggravation and invasion of privacy that accompanies unsolicited text messages, but also
because they will no longer have to pay their service providers for receipt of such messages -- and,
without more, would justify approval of the settlement as fair, reasonable and adequate.
But that is not the only relief provided. Each class member that submitted a valid claim
will also receive a fully transferrable Merchandise Certificate with a face value of $25 that can be
used to obtain any items sold by Payless (e.g., shoes, socks, shoelaces, make-up, jewelry,
3 That is the date upon which Payless implemented its requirement of a double opt-in for obtaining numbers for its
texting campaigns.
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handbags, purses, belts, hats, scarves, accessories, sunglasses, umbrellas, wallets and backpacks,
etc.) offered at any of Payless's 3,800 stores throughout the United States, at any time up to 12
months from the date of issuance. As has been extensively discussed in prior briefing, the
Merchandise Certificates can be combined with gift cards or certificates, do not require the
purchase of any particular product or the expenditure of any money, and are worth more than
enough to cover the entire cost of one or more pair of shoes, accessories, and non-footwear items.
(Dkt. No 73.)4 And this settlement contains a particularly important provision: To the extent the
dollar value of redeemed Merchandise Certificates is less than $5 million (under the settlement,
Payless is required to track the dollar amount of certificates actually redeemed), Payless will make
a Cy Pres Contribution in an amount equal to the difference between the amount redeemed and $5
million to tax exempt charities approved by the Court in the form of Merchandise Certificates with
a face value of $15. (Jacobs Final App. Decl. ¶ 7.) Based on past experience with the "Payless
Gives Shoes for Kids” charitable campaign, about 85 percent of such merchandise certificates are
redeemed within three months. (Dkt. No 73.) Per the Court’s urgings, the Merchandise
Certificates donated will have a six-month life. (Second Corrected Settlement Agreement, ¶ 7;
Docket No. 75.)
In addition, Payless has already paid the full costs of providing notice to the class, has and
continues to pay Settlement Administrator administration expenses, and has agreed to pay an
incentive award to Plaintiff for serving as class representative and Class Counsel's attorneys’ fees
and expenses up to a specified amount ($1,250,000 in fees and $20,000 in expenses, as awarded
by the Court). Payment of these items by Payless under the settlement is in addition to the
benefits provided to the Settlement Class and will not reduce the benefits available to the
Settlement Class or the recipient charities. In other words, such fees and costs will not be
deducted from the class's recovery, as is often the case in class action settlements.
4 The average price at which footwear and non-footwear inventory items were offered for sale at Payless stores
located in the United States as of the end of June 2011 was significantly below the $25 amount of the Merchandise
Certificates. As of the end of June 2011, the average price at which footwear items were offered for sale was less than
the amount of the Merchandise Certificates. (Id.)
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PLAINTIFF’S MEMORANDUM IN SUPPORT OF FINAL
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Therefore, as a result of this settlement, Payless’s practice of texting unsuspecting and
unconsenting customers will stop, and Payless will pay substantially in excess of $5 million
dollars to the class (directly and indirectly via cy pres, costs of notice and administration,
attorney's fees, etc.). The deterrent effect of a such a result is difficult to monetize, but of
tremendous importance in causing other companies considering a texting program to consider how
they may do so without running afoul of the law and subjecting their companies to substantial
exposure. (Jacobs Final App. Decl. ¶ 13.)
Given the potential hurdles facing Plaintiff in this litigation, the settlement as a whole is
fair, reasonable, and adequate, and merits the Court’s final approval. Plaintiff thus respectfully
requests that the Court now grant final approval of the settlement, and award Class Counsel the
requested attorneys’ fees and expenses and Class Representative the requested incentive award.
II. TERMS OF THE SETTLEMENT
The terms of the settlement preliminarily approved by the Court, which are set forth in the
(second corrected) Settlement Agreement (Dkt. No. 75), insofar as concerns benefits conferred
upon the class have been described above (and in prior filings) and will not be repeated here.
Should the Court grant final approval of the Settlement, and after the time for appeal has
expired, Plaintiff and each and every member of the Settlement Class who has not timely filed a
request to be excluded (or who has rescinded a previous opt-out request pursuant to the Settlement
Agreement), will release and forever discharge Defendants from any and all manner of claims,
whether known or unknown, involving the sending or alleged sending of SMS text messages to
persons by or on behalf of Payless ShoeSource, Inc. from October 29, 2005 through October 4,
2010 that were or could have been alleged or asserted in the lawsuit relating to such text messages.
(See Dkt. No. 75 ¶¶ 18-22 for the full Release language). The Release is tailored to the allegations
of the litigation and is appropriate.
III. THE CLASS NOTICE COMPORTS WITH DUE PROCESS AND RULE 23
Before final approval of a class action can issue, notice of the settlement must be provided
to the class. Fed. R. Civ. P. 23(e)(1). Rule 23 requires that the class receive “the best notice
practicable under the circumstances, including individual notice to all members who can be
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identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B). Actual notice, however, is not
required. Silber v. Mabon, 18 F.3d 1449, 1454 (9th Cir. 1994). Notice to the class must be
“reasonably calculated under all the circumstances, to apprise interested parties of the pendency of
the action and afford them an opportunity to present their objections.” Mullane v. Central
Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). Not only must notice of a class action
settlement be properly disseminated to the class, its content must also “generally describe[] the
terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate and
come forward to be heard.” Churchill Village, LLC v. Gen Elec., 361 F.3d 566, 575 (9th Cir.
2004). Rule 23(c)(2)(B) requires that the notice clearly, and in concise, plain, easily understood
language state: (a) the nature of the action; (b) the definition of the class certified; (c) the class
claims, issues, or defenses; (d) that a class member may enter an appearance through an attorney if
he or she desires; (e) that the court will exclude any member of the class upon request; (f) the
method and time to request exclusion; and (g) that the judgment will be binding on class members.
In the Preliminary Approval Order, the Court previously approved, as to form, manner and
content, the Notice Plan specified in the Settlement Agreement and found that the manner and
method of distribution of the Class Notice and Claim Form (as revised) was the “best notice
practicable under the circumstances and that it constitutes due and sufficient notice to all persons
entitled thereto and complies fully with the requirements of the Federal Rules of Civil Procedure
and of Due Process.” (Dkt. 76, ¶ 8.) The Parties and the Settlement Administrator have fully
implemented the directives of that Order and complied with the notice plan. (Hamer Decl. ¶ ¶ 2-7;
Jacobs Final App. Decl. ¶¶ 3-5. )
The Settlement Agreement contemplated, and the Parties and Settlement Administrator
executed, a five-part notice plan designed to reach as many potential settlement class members as
possible through reasonable effort. (Dkt. No. 75 1 ¶ 4; Hamer Decl. ¶ ¶ 2-7.) First, direct notice
of the settlement was sent via email to those class members for whom Payless or VMBC had
email addresses. (Dkt. No. 75 ¶ 4a) By September 19, 2011, email notices in the form called for
by the Settlement Agreement and Preliminary Approval Order were sent to some 1.8 million class
members. (Hamer Decl. ¶ 5.) Second, by September 19, 2011, the Settlement Administrator
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launched and thereafter administered a settlement website at www.paylesstextsettlement.com ,
serving as the “long-form” notice, which provided links to the settlement agreement, the claim
form, and other relevant Court documents, contained answers to Frequently Asked Questions,
provided for the online submission of claims and was supported with internet advertising in the
form of Google AdWords keyword searching, which aided in directing potential members of the
Settlement Class to the settlement website. (Dkt. No. 75 ¶ 4b; Hamer Decl. ¶ 6.) Third, Payless
included on the landing page for www.payless.com, above the global links appearing at the bottom
of the screen, a conspicuous notice announcing the settlement of the text messaging class action
lawsuit and provided a link to the settlement website, as well as the toll-free number of the
Settlement Administrator. (Dkt. No. 75 ¶ 4c; Jacobs Final App. Decl. ¶ 5.) Fourth, Payless
provided In-Store notice throughout the notice period by posting in all of its stores in the United
States in a prominent location as close to its cash registers as practical (and clearly and
conspicuously visible from the cash register) posters announcing the settlement of the text
messaging class action lawsuit. (Dkt. No. 75 ¶ 4d; Jacobs Final App. Decl. ¶ 5.) Fifth, Payless
provided notice on all of its U.S. store register receipts, announcing the settlement and providing
information to a link to the settlement website, as well as the toll free number of the Settlement
Administrator. (Dkt. No. 75 ¶ 4e; Jacobs Final App. Decl. ¶ 5.) During the notice period, over
20 million receipts containing notice of the settlement were provided by Payless to customers.
(Id.)
In addition, Payless provided notice of the settlement to appropriate federal and state
officials under CAFA (Dkt. No. 75 ¶ 35; Jacobs Final App. Decl. ¶ 14) and Class Counsel issued a
press release announcing the settlement. (Dkt. No. 75 ¶ 34; Jacobs Decl. ¶ 10.) This was
comprehensive and robust notice, and clearly the best practicable notice. Thus, notice to the class
complied with the Preliminary Approval Order, Rule 23, and Due Process, and satisfied the
standard of the “best notice practicable under the circumstances.”
IV. THE SETTLEMENT WARRANTS FINAL APPROVAL
The law favors the compromise and settlement of class action suits. See, e.g., Byrd v. Civil
Serv. Comm’n, 459 U.S. 1217 (1983); Churchill Village, 361 F.3d at 576; Class Plaintiffs v. City
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of Seattle, 955 F.2d 1268, 1276 (9th
Cir. 1992). Under Federal Rule of Civil Procedure 23(e),
“[t]he court must approve any settlement, voluntary dismissal, or compromise of the claims, issues
or defenses of a certified class” and such approval may occur “only after a hearing and on finding
that the settlement, voluntary dismissal, or compromise is fair, reasonable, and adequate.” Fed. R.
Civ. P. 23; In re OmniVision Tech. Inc., 559 F. Supp. 2d 1036, 1040 (N.D. Cal. 2008) (citing
Staton v. Boeing Co., 327 F.3d 938, 959 (9th
Cir. 2003)). A settlement is fair, reasonable, and
adequate where, as here, “the interests of the class are better served by the settlement than by
further litigation.” Garner v. State Farm Mut. Auto. Ins. Co., No. CV-08-1365-CW, 2010 WL
1687832, *8 (N.D. Cal. Apr. 22, 2010) (quoting MANUAL FOR COMPLEX LITIG. (FOURTH) § 21.61
(2004)). While the Court has discretion in approving any settlement, “[i]n exercising this
discretion, this circuit has long deferred to the private consensual decision of the parties.” Garner
v. State Farm Mut. Auto. Ins. Co., No. CV-08-1365-CW, 2010 WL 1687832, *8 (N.D. Cal. April
22, 2010 (citing Rodriguez v. West Publishing Corp., 563 F.3d 948, 965 (9th
Cir. 2009)(“We put a
good deal of stock in the product of an arms-length, non-collusive, negotiated resolution . . .”)).
In determining whether a settlement agreement is fair, adequate, and reasonable, a district
court may consider some or all of the following non-exhaustive factors:
the strength of plaintiffs’ case; the risk, expense, complexity, and likely
duration of further litigation; the risk of maintaining class action status
throughout the trial; the amount offered in settlement; the extent of
discovery completed, and the stage of the proceedings; the experience and
views of counsel; the presence of a governmental participant; and the
reaction of the class members to the proposed settlement.
Molski v. Gleich, 318 F.3d 937, 953 (9th
Cir. 2003). While the Court may consider each of the
foregoing factors when considering the final approval of a class action settlement, “[i]n the Ninth
Circuit, a court affords a presumption of fairness to a settlement, if: (1) the negotiations occurred
at arm’s length; (2) there was sufficient discovery; (3) the proponents of the settlement are
experienced in similar litigation; and (4) only a small fraction of the class objected.” Lewis v.
Starbucks Corp., No. 07-cv-00490, 2008 WL 4196690, at *7 (E.D. Cal. Sept. 11, 2008) (citing
Alba Conte & Herbert B. Newberg, NEWBERG ON CLASS ACTIONS § 11:41 (4th
Ed 2002)). As
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discussed above, the Settlement Agreement, to which there has been no objection, was reached
after extensive arm’s length negotiations and mediation under the supervision of a well-respected
mediator, after a sufficient exchange of discovery, by experienced counsel with extensive
experience with the TCPA and class actions. Accordingly, the Court’s analysis of the factors
listed below should be examined with a presumption that the Settlement Agreement is fair. In the
instant case, each of these factors militates in favor of approving the settlement.
A. The Strength of the Plaintiffs’ Case
The first step in assessing the fairness of a class action settlement is to examine “Plaintiff’s
likelihood of success on the merits and the range of possible recovery.” Garner, 2010 WL
1687832, at *9; see also Protective Comm. for Indep. Stockholders v. Anderson, 390 U.S. 414,
424-25 (1968) (“Basic to [analyzing a proposed settlement] in every instance, of course, is the
need to compare the terms of the compromise with the likely rewards of the litigation.”). The
analysis of Plaintiff’s probability of success on the merits, however, is not rigid or beholden to any
particular formula and “the Court may presume that through negotiation, the Parties, counsel, and
mediator arrived at a reasonable range of settlement by considering Plaintiff’s likelihood of
recovery.” Garner, 2010 WL 1687832, *9 (citing Rodriguez, 563 F.3d at 965).
In order to obtain a successful recovery on his First Cause of Action through litigation,
Plaintiff would have needed to obtain certification of a litigation class pursuant to Rule 23(b)(3)
and then prove at trial that Defendants made: (1) unauthorized calls, (2) to class members’ cell
phones, (3) using an ATDS, in violation of 47 U.S.C. § 227 (b)(1)(A)(iii). See Dkt. 1; Satterfield
v. Simon & Schuster, 569 F.3d 946, 950 (9th
Cir. 2009) (citing 47 U.S.C. § 227(b)(1)(A)(iii));
Kazemi v. Payless Shoesource, Inc., No. C 09-5142, 2010 WL 963225, at *2 (N.D. Cal. Mar. 16,
2010). In order to obtain a successful recovery on his Second Cause of Action through litigation,
Plaintiff would have needed to obtain certification of a litigation subclass pursuant to Rule
23(b)(3) and then prove at trial that Defendants made: (1) two or more calls to each subclass
member within a 12 month period; (2) in violation of the Do Not Call List regulations, by making
“solicitation calls” to numbers registered on the national Do-Not-Call registry and by making
calls made for “telemarketing purposes” without having “instituted procedures for maintaining a
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list of persons who request not to receive telemarketing calls made by or on behalf of that person
or entity,” e.g., an internal Do-Not-Call list. 47 USC §227(c); 47 CFR §64.1200(c) and (d).
Defendants’ Answer to the Complaint asserted thirty-five separate affirmative defenses.
(Dkt. No. 35.) The affirmative defenses included that Plaintiff consented to receive the text
messages, that the text messages were not transmitted with an ATDS, that a text message is not a
“call” under the TCPA, that consumers must be charged for the text messages for the TCPA to
apply, that the TCPA is unconstitutional as violative of the First Amendment and Due Process
Clause, that Plaintiff was not injured, harmed or damaged, that Defendants had an established
business relationship with the class, that Defendants had established and implemented, with due
care, reasonable practices and procedures to effectively prevent telephone solicitations in violation
of the regulations, and that a litigation class or subclass could not be certified. (Id.) Only one of
these defenses need gain traction with a judge or jury to defeat Plaintiff’s claims. And, if plaintiff
failed to obtain certification of a contested litigation class, the case would effectively be over.
In the instant case, there was considerable risk in proceeding with litigation. With respect
to Plaintiff’s First Cause of Action, Defendants disputed that the equipment used by VMBC on
behalf of Payless constituted an “automatic telephone dialing system” or ATDS as defined by the
TCPA and the FCC’s rules, i.e., equipment that has “the capacity ... to store or produce telephone
numbers to be called, using a random or sequential number generator” and “to dial such numbers.”
47 U.S.C. §227(a)(l) and 47 C.F.R. § 1200(f)(1). In addition, unlike the few other TCPA text
messaging cases that have been brought in recent years, this case involved unique and untested
questions with respect to the TCPA’s “prior express consent” defense. Here, it was not claimed
that Payless purchased any third party lists of cell phone numbers for use in its text messaging
program. Rather, Defendants claimed that Plaintiff and the class voluntarily provided their
telephone numbers directly to Defendants at the point of sale and that this constituted sufficient
consent to be contacted via telephone (Dkt. No. 35, Answer at ¶ 56) since they argued that under
FCC regulations “[p]ersons who knowingly release their phone numbers have in effect given their
invitation or permission to be called at the number which they have given” and that the provision
of a phone number “reasonably evidences prior express consent to be contacted at that number.”
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(Dkt. No. 20, Motion to Strike and Dismiss at p.4). Defendants further claimed that Plaintiff
would be barred from arguing against the FCC’s purported interpretation of “prior express
consent.” See 28 U.S.C. § 2342; Leckler v. Cashcall, Inc., 2008 WL 5000528, at *2-3 (N.D.Cal.
Nov. 21, 2008) (Hobbs Act, 28 U.S.C. § 2342, in conjunction with judicial review provisions of
Communications Act, 47 U.S.C. § 402(a), vests federal courts of appeals with exclusive
jurisdiction to determine validity of final FCC orders). Defendants also argued that a litigated
class could not be certified since the “prior express consent” issue would devolve into countless
mini-trials as to how each customer provided his or her cell phone number to Defendants and
what each customer was told or understood when providing the number.
With respect to Plaintiff’s Second Cause of Action, Defendants claimed that the TCPA
contains a safe harbor for companies that establish and implemented with due care practices and
procedures to prevent persons from receiving calls who had listed their numbers on Do Not Call
lists. 47 USC § 227(c)(5)(C). Defendants argued, and discovery revealed, that Payless did have a
written Do Not Call List policy, leaving Plaintiff with a much weaker claim: that the written
procedures were not implemented with due care. Defendants also argued that it only sent text
messages to persons with whom Payless had a business relationship, i.e., Payless’s customers, and
thus could avail the “Established Business Relationship” or EBR defense to defeat the claims.
In addition, the Parties previously provided the Court with supplemental briefings
addressing the various strengths and weaknesses of Plaintiff’s claims. (See, Dkt. Nos. 61, 63, 70
and 72) Suffice it to say, while Class Counsel are confident in the strength of Plaintiff’s claims,
they are also cognizant of the risks inherent in proceeding without this Settlement. (Jacobs Fee
Decl. ¶¶ 11-12.) Given the realities of the case (discussed below), the uncertainties of the law, the
potentially harmful facts learned in discovery, the novelty of the issues remaining that underlie
Plaintiff’s claims, the assuredly vigorous defense that would be presented, and the number of
affirmative defenses presented, the strength of Plaintiff’s case could not justify rejection of this
settlement.
The first factor (the strength of plaintiffs’ case) favors approval of the settlement.
B. The Risk Of Continued Litigation
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The second “fairness” factor this Court may consider is “the risk of continued litigation
balanced against the certainty and immediacy of recovery from the Settlement.” In re Omnivision
Tech., Inc., 559 F. Supp. 2d 1036, 1041 (N.D. Cal. 2008) (citing In re Mego Fin. Corp. Sec. Litig.,
213 F.3d 454, 458 (9th
Cir. 2000)). “The Court should consider the vagaries of litigation and
compare the significance of immediate recovery by way of compromise to the mere possibility of
relief in the future, after protracted and expensive litigation.” Lipuma v. Am. Express Co., 406 F.
Supp. 2d 1298, 1323 (S.D. Fla. 2005); see also Garner, 2010 WL 1687832, *10 (“Settlement
avoids the complexity, delay, risk and expense of continuing with the litigation and will produce a
prompt, certain, and substantial recovery for the Plaintiff class”). Further, this factor favors the
approval of a settlement where, as here, significant procedural hurdles remain, including
anticipated summary judgment motions, class certification, Daubert motions, and appeals.
Garner, 2010 WL 1687832, at *10 (citing Rodriguez, 563 F.3d at 966).
Here, it is certain that the expense, duration and complexity of the protracted litigation that
would result in the absence of settlement would be substantial. Significant costs would be
expended by both Parties should this matter proceed to trial, including expenses for expert
witnesses and technical consultants relating to, inter alia, whether an ATDS was used to send the
messages, and the myriad of other costs that accompany the trial of a nationwide class action.
Yet, the added cost and burden of continued litigation would not necessarily produce better results
for the class; for instance, it is difficult to contemplate better injunctive relief than Payless's
agreeing to a complete stoppage of the text messaging practices that gave rise to the litigation.
Moreover, no matter how clear a violation, it is difficult to believe that a judgment of over $4
billion could be obtained and sustained on appeal for “technical” violations of a statute, especially
at this time when consumer claims lead such a difficult life in federal courts.
As a result, Plaintiff certainly faced a significant challenge in proving his case on the
merits. Given the complexity of the issues, the defeated party would likely appeal. As such, the
substantial and prompt relief provided to the class under the Settlement weighs heavily in favor of
its approval compared to the inherent risk of continued litigation, trial, and appeal.
C. The Risk of Maintaining Class Action Status
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The Court certified, for settlement purposes only, a nationwide Settlement Class in the
Preliminary Approval Order. (Dkt. No. 76, ¶¶ 4-5.) However, if the Court fails to grant final
approval of the Settlement Agreement for any reason, the certification of the class will
automatically become void. (Id. ¶ 7) Although Plaintiff and Class Counsel believe they would be
successful in obtaining certification of an adversarial class absent the Settlement, Defendants have
made it clear that in its absence they would vigorously oppose adversarial certification. Further,
even if Plaintiff were successful in a motion for class certification absent the Settlement,
Defendants could move for decertification of the class before or during trial and likely would
challenge certification on appeal. Fed. R. Civ. P.23(c)(1)(C). Accordingly, this factor weighs in
favor of approving the Settlement Agreement because if at any point the Class failed to become
certified or if class certification was reversed, the Class would get nothing.
D. The Amount Offered in the Settlement
The amount of recovery offered by Defendants also strongly supports approval. The
reasonableness of the amount offered can be determined by comparing it to the maximum
potential recovery if Plaintiff were to ultimately succeed at trial. See OmniVision, 559 F. Supp.
2d at 1042 (finding a certain recovery of 6% of the potential recovery after accounting for
attorneys’ fees and costs to be reasonable and favor approval of the settlement). However, it is
well-settled that a settlement amounting to “only a fraction of the potential recovery does not per
se render the settlement inadequate or unfair.” Officers for Justice v. Civil Serv. Comm’n, 688
F.2d 615, 628 (9th
Cir. 1982). Moreover, the certainty and relative immediacy of the benefits
under the Settlement agreement, when compared with the risk associated with seeking more but
receiving nothing, further justifies the reasonableness of accepting less than the maximum
potential recovery. See OmniVision, 559 F. Supp. 2d at 1042.
As noted above, Plaintiff and the Class have secured through this settlement all of the
injunctive relief that they could possibly have sought through litigation. And, with respect to
statutory damages, the maximum potential recovery is, in a sense, largely illusory. For instance, if
Plaintiff was successful in proving Defendants violated the TCPA, Plaintiff and the approximate 8
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million class members would be entitled to at least $500 per violation in statutory damages under
47 U.S.C. § 227(b)(3) and “up to”5 $500 per violation under 47 U.S.C. § 227(c)(5).
6 However,
such a “huge” recovery here is both infeasible and unrealistic. It is infeasible because an award of
over $4 billion would pose a serious problem to Defendants’ financial health and their ability to
pay a judgment. It is unrealistic for the reasons noted earlier (i.e., it is difficult to believe that a
judgment that large could be obtained and sustained on appeal for technical violations of a
statute where no actual damages are sought) and because it likely raises serious due process issues.
Here, the $25 Merchandise Certificates represent a recovery of 5% of the maximum
potential recovery per class member, i.e., $500 in statutory damages. When combined with the
injunctive relief that precisely targets the allegedly unlawful conduct at issue in the litigation, such
recovery provides truly meaningful benefit to the class. Given the inherent risks of continued
litigation and possible non-payment discussed above, the reasonableness of the immediate
payment of $25 Merchandise Certificates, plus injunctive relief, is readily apparent. See Lipuma,
406 F. Supp. 2d at1323 (“[I]t has been held proper to take the bird in hand instead of a prospective
flock in the bush”). Accordingly, this factor too favors final approval of the Settlement.
E. The Extent of Discovery Completed and the Stage of the Litigation
The next factor allows the Court to consider both the extent of the discovery conducted to
date and the stage of the litigation as indicators of class counsel’s familiarity with the case and
ability to make informed decisions. OmniVision, 559 F. Supp. 2d at 1042 (citing In re Mego Fin.
Corp. Sec. Litig., 213 F.3d 454, 459 (9th Cir. 2000)). Where extensive discovery has occurred, it
is reasonable for the district court to conclude that Class Counsel fully grasped the merits of the
case prior to engaging in settlement or mediation. Rodriguez, 563 F.3d at 967.
5 Unlike § 227(b)(3), statutory damages under § 227(c)(5) are discretionary.
6 Further, if Plaintiff was successful in demonstrating the willful violation of the TCPA, the Court has the discretion to
treble the available damages. 47 U.S.C. § 227(b)(3). However, although treble damages are available under the TCPA,
the Court need not factor their availability into its consideration of the reasonableness of the negotiated amount. See
Rodriguez, 563 F.3d at965-66.
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The Parties’ understanding of the factual and legal issues in this case is extremely well
developed. Following the denial of Defendants’ motions to dismiss the Complaint, the Parties
exchanged both formal and informal discovery, and when Class Counsel appeared at the mediation
with Judge Politan, they were intimately familiar with the applicable case law and were in
possession of sufficient discovery to intelligently negotiate the terms of the instant Settlement to
the ultimate benefit of each class. The Declarations of Judge Politan and of John G. Jacobs, filed
in connection with the motion for attorneys’ fees and expenses (Docket No. 53 specifically
address these matters and will not be repeated here.
Accordingly, this factor too favors approval of the Settlement.
F. The Experience and Opinion of Counsel
The next factor has the Court consider counsel’s experience and views about the adequacy
of the Settlement. Garner, 2010 WL 1687832, *14 (considering views of counsel that settlement
was fair); see aslo OmniVision, 559 F. Supp. 2d at 1043. In fact, “[t]he recommendations of
plaintiff’s counsel should be given a presumption of reasonableness.” OmniVision, 559 F. Supp.
2d at 1043 (quoting Boyd v. Bechtel Corp., 485 F. Supp. 610, 622 (N.D. Cal. 1979)); Nat’l Rural
Telecomms Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 528-29 (C.D. Cal. 2004) (“Great weight is
accorded to the recommendation of counsel, who are most closely acquainted with the facts of the
underlying litigation.”). Reliance on such recommendations is premised on the fact that “parties
represented by competent counsel are better positioned than courts to produce a settlement that
fairly reflects each party’s expected outcome in the litigation.” Rodriguez, 563 F.3d at 967
(quoting In re Pacific Enters. Sec. Litig., 47 F.3d 373, 378 (9th Cir. 1995)).
Class Counsel have regularly engaged in major complex litigation, and have had extensive
experience in prosecuting consumer class action lawsuits of similar size and complexity. (See the
resumes of Class Counsel attached to the Motion For Preliminary Approval, Docket No. 53 .)
Through their investigation, review of discovery materials, litigation, mediation sessions, and the
settlement process, Class Counsel have gained an intimate understanding of the law and facts at
issue and have previously stated under oath their belief that the settlement is “fair, adequate, and
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reasonable.” (Jacobs Fee Decl. ¶ ¶ 18, 26-27.) This factor, therefore, also favors the Court’s final
approval of the Settlement Agreement.
G. The Absence of Collusion Supports Approval
This Court also must also consider the absence or presence of collusion between the
parties. Garner, 2010 WL 1687832, *13. “Before approving a class action settlement, the district
court must reach a reasoned judgment that the proposed agreement is not the product of fraud or
overreaching by, or collusion among, the negotiating parties.” Id. (quoting Class Plaintiffs v. City
of Seattle, 955 F.2d 1268, 1290 (9th Cir. 1992)).
In this case, both the terms of the Settlement and the evidence submitted in support
demonstrate a complete absence of collusion. The Parties here have submitted sworn proof
detailing the steps taken in the mediation process that resulted in both the class relief and attorney
fee amount. The instant Settlement was, in the words of Judge Politan, “negotiated aggressively,
in good faith and at arm’s length and was not the product of collusion.” (Politan Decl. ¶ 10, part
of Docket No. 79.) Moreover, this is not a case where fees are disproportionate to the class award
as in In re Bluetooth Headset Products Liab. Litig., 654 F.3d 935, 946-47 (9th
Cir. 2011). Unlike
Bluetooth, where fees represented 83.2% of the total value of the settlement, the fees here are
substantially below 25% of the total value of the Settlement. (Dkt. No. 79; Jacobs Fee Decl. ¶¶
18-19.) Here, the quality of the settlement negotiated and the reasonableness of the fees sought
collectively show that Class Counsel did not exchange potential class benefits for increased
attorney fees. Accordingly, the Court should find that this process resulted in a Settlement free
from any taint of collusion.
H. The Presence of a Governmental Participant
Although there were no “governmental coattails for the class to ride” in this case,
Rodriguez, 563 F.3d at 964, Defendants were nonetheless obligated to notify the Unites States
Attorney General and the appropriate state officials as a condition of obtaining Court approval. 28
U.S.C. § 1715. Garner, 2010 WL 1687832, *14. “Although CAFA does not create an affirmative
duty for either the state or federal officials to take any action in response to a class action
settlement, CAFA presumes that, once put on notice, state or federal officials will raise any
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concerns that they may have during the normal course of the class action settlement procedures.”
Id. Defendants timely complied with CAFA’s notice requirement and provided the requisite
notice by April 11, 2011. (Jacobs Final App. Decl. ¶ 14.) No state of federal official has raised
any objection to the settlement. (Id.) Accordingly, this factor favors approval of the Settlement.
I. The Reaction of Class Members
The final factor in the Court’s determination of the fairness, adequacy, and reasonableness
of the Settlement Agreement is the reaction of the class to the settlement. Kent v. Hewlett-
Packard Co.,No. 5:09-CV-05341-JF HRL, 2011 WL 4403717, at *2 (N.D. Cal. Sept. 20, 2011).
“It is established that the absence of a large number of objections to a proposed class action
settlement raises a strong presumption that the terms of a proposed class action settlement are
favorable to the class members.” Nat’l Rural Telecomms Coop. v. DIRECTV, Inc., 221 F.R.D.
523, 528-29 (C.D. Cal. 2004); see also Kent, 2011 WL 4403717,at *2 (finding that twenty-four
exclusions (.0543%) and eight objections (.017%) out of an estimated 45,000 class members was a
“positive response from the class weigh[ing] strongly in favor of approving the settlement”); Wren
v. RGIS Inventory Specialists, C-06-05778 JCS, 2011 WL 1230826, at *10 (N.D. Cal. Apr. 1,
2011) (0.02% objection rate “strongly supports approval of the settlement”). A complete lack of
objections from the class members to the Settlement Agreement further favors its approval.
Churchill Village LLC v. Gen. Elec., 361 F.3d 566, 577 (9th Cir. 2004).
In this case, the court-approved notice procedures were fully implemented by the parties
and the Settlement Administrator, yet they yielded no objections and only one request for
exclusion. (Hamer Decl. ¶ 9; Jacobs Final App. Dec. ¶ 14.) In this day of professional objectors
(both ideologically and venally motivated) and cynicism about class actions, the fact that there is
but a single request for exclusion and not a single objection says much about the appropriateness
of granting final approval of the settlement and indicates that the class does not find the proposed
settlement problematic. Plus, over 22,500 claims were submitted seeking monetary relief under
the settlement. (Hamer Decl. ¶ 8.) Accordingly, this and the other factors all favor this Court’s
entering final approval of the settlement.
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V. CONCLUSION
For the foregoing reasons, Plaintiff respectfully requests that the Court grant final approval
to the settlement agreement, approve Class Counsel’s request for attorneys’ fees and expenses and
Class Representative incentive awards, enter the proposed Final Approval order separately
submitted herewith (which proposed order was also Exhibit F to the Settlement Agreement), and
grant such further relief the Court deems reasonable and just.
Dated: February 17, 2012 Respectfully Submitted,
MOHAMMAD KAZEMI, individually and on
behalf of a class of similarly situated individuals,
/s/ John G. Jacobs ______________
John G. Jacobs (Pro Hac Vice)
Bryan G. Kolton (Pro Hac Vice) JACOBS KOLTON, CHTD. 122 South Michigan Avenue Suite 1850 Chicago, Illinois 60603 Jeffrey F. Keller (SBN 148005) Carey G. Been (SBN 240996) Keller Grover, LLP 1965 Market Street San Francisco, California 94103
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PLAINTIFF’S MEMORANDUM IN SUPPORT OF FINAL
APPROVAL OF CLASS ACTION SETTLEMENT AGREEMENT Case No. 3:09-CV-05142-EMC
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CERTIFICATE OF SERVICE
I, John G. Jacobs, an attorney, certify that on February 21, 2012, I served the above and
foregoing Notice of Motion and Motion for Final Approval of Class Action Settlement by
causing true and accurate copies of such paper to be filed and transmitted to the persons registered
to receive such notice via the Court’s CM/ECF electronic filing system.
/s/ John G. Jacobs
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DECLARATION OF JOHN G. JACOBS IN SUPPORT OF MOTION FOR FINAL APPROVAL OF SETTLEMENT AGREEMENT
CASE NO. 3:09-CV-05142-EMC
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JEFFREY F. KELLER (SBN 148005) CAREY G. BEEN (SBN 240996) KELLER GROVER, LLP 1965 Market Street San Francisco, California 94103 Telephone: (415) 543-1305 Facsimile: (415) 543-7861 [email protected] [email protected] JOHN G. JACOBS (PRO HAC VICE) BRYAN G. KOLTON (PRO HAC VICE) JACOBS KOLTON, CHTD. 122 South Michigan Avenue, Suite 1850 Chicago, Illinois 60603 Telephone: (312) 427-4000 Facsimile: (312) 427-1850 [email protected] [email protected] Attorneys for Plaintiff and the Settlement Class
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA MOHAMMAD KAZEMI, individually and on behalf of a class of similarly situated individuals, Plaintiff, v. PAYLESS SHOESOURCE, INC., a Missouri corporation, COLLECTIVE BRANDS, INC., a Delaware corporation, and VOICE-MAIL BROADCASTING CORPORATION d/b/a VOICE & MOBILE BROADCAST CORPORATION a/k/a VMBC, Defendants.
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
Case No. 3:09-CV-05142-EMC CLASS ACTION DECLARATION OF JOHN G. JACOBS
IN SUPPORT OF MOTION FOR FINAL
APPROVAL OF SETTLEMENT
AGREEMENT
Location: Courtroom 5, 17th Floor.
450 Golden Gate Avenue
San Francisco, California 94102
Date: March 23, 2012
Time: 1:30 p.m.
The Honorable Edward M. Chen
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DECLARATION OF JOHN G. JACOBS IN SUPPORT OF MOTION FOR
FINAL APPROVAL OF SETTLEMENT AGREEMENT CASE NO. 09 CV 5142 - EMC
DECLARATION OF JOHN G. JACOBS
John G. Jacobs, pursuant to 28 U. S. C. § 1746, hereby declares and states as follows:
1. I am President and founder of Jacobs Kolton, Chtd., which at the time this suit was
filed was known as The Jacobs Law Firm, Chtd. I am a member of the bar of Illinois and have
been admitted pro hac vice in this matter. I am one of the attorneys representing Plaintiff and the
Class in this matter and have been named Class Counsel by the Court’s Preliminary Approval
Order. This declaration is based on my own personal knowledge except where expressly noted
otherwise.
2. I have previously filed a declaration in this matter dated October 13, 2011, in
connection with the Motion For Approval Of Attorneys’ Fees And Expenses And Class
Representative Incentive Award (Docket No. 79), as well as a firm resume that was Exhibit 2 to
the Motion For Preliminary Approval Of Class Action Settlement Agreement (Docket No. 53). I
will not repeat here all the information set forth in those documents.
3. After the entry of the Preliminary Approval Order, I and other Class Counsel
worked with Payless and the Settlement Administrator, Heffler, Radetich & Saitta LLP (“Heffler”)
of Philadelphia, Pennsylvania, to ensure that the settlement website was properly constructed and
maintained, including appropriate case documents and FAQs and answers. We worked with
Heffler (principally with Michael E. Hamer) as well concerning the telephone support system used
by Heffler to field class member calls and worked with Mr. Hamer and Payless to try to effect a
user-friendly system that would provide routine information and also make it convenient to speak
to a live person to answer particular inquiries. We also worked with Mr. Hamer to see that the
email notice was sent in compliance with the Court’s order.
4. Shortly after the email notice went out, our office began to receive calls from
Payless customers asking questions about the settlement.
5. The settlement called for Payless to provide a good deal of the notice in this case,
including posting of signs near its cash registers in all of its stores informing customers about the
settlement, including notice of the settlement on all register receipts at all of its stores, and
including a link on its landing page at www.payless.com directing users to the Settlement Website
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DECLARATION OF JOHN G. JACOBS IN SUPPORT OF MOTION
FOR ATTORNEYS’ FEES AND EXPENSES AND INCENTIVE AWARD
CASE NO. 3:09-CV-05142-EMC
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maintained by the Settlement Administrator. I was able to confirm that Payless did in fact comply
with this latter requirement (the link on its website) because I checked the website myself.
Similarly, I made it a point to go to a fair number of Payless stores around the country – in San
Francisco, Chicago, New York, Brooklyn, and Oklahoma City – and in each instance, the required
signage was prominently on display right by the cash register, such that it would be virtually
impossible to miss. Similarly, in several instances, I made small purchases (shoelaces, polish,
etc.) in order to obtain a register receipt. In each instance, the receipt contained the information
about the settlement required about the settlement agreement. I noticed a spike in the number of
phone calls our office received about the case after the signs went up and the register receipts
began containing the disclosure about the settlement. I asked several of the callers how they came
to call me and they told me it was as a result of reading their receipt. (I have been advised by
counsel for Payless that more than 20 million such register receipt notices were issued during the
notice period.)
6. I have been advised by counsel for Payless it will be supplying the Court with
appropriate confirmation of its compliance with the notice requirements that devolved upon it
under the Settlement Agreement and Preliminary Approval Order, but I am convinced from my
anecdotal sources as described above that in fact Payless complied with its notice obligations. I
am likewise convinced that the plan of notice called for by the settlement was effective.
7. Prior to the Court’s grant of preliminary approval of the settlement, I informed the
Court that, based on my experience, I did not expect a high claims rate in this case. As I
explained, although people tend to be furious at receiving unwanted text message advertisements,
they tend to be very suspicious when they get a notice that says simply fill out a form, giving
one’s address and phone number and they will receive a payment, even if it is a very high cash
figure in the $150-$200 range, and redundant, comprehensive notice procedures do not seem to
make much of a difference. It was because of those concerns that we had bargained so vigorously
for a guaranteed payout by Payless of $5 million in the form of charity payments if the amount of
redeemed certificates did not total $5 million. The amount of the certificates to be donated to the
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DECLARATION OF JOHN G. JACOBS IN SUPPORT OF MOTION
FOR ATTORNEYS’ FEES AND EXPENSES AND INCENTIVE AWARD
CASE NO. 3:09-CV-05142-EMC
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charities ($15 each) and their terms (they can be used for any item in any Payless store in the
United States, can be combined with any other certificates or promotions, are good for a period of
six months, etc.) assures that the benefit of the settlement to the settlement class (both directly and
indirectly through the cy pres donation) is meaningful and that the full amount is likely to be
spent.
8. According to our daily time records, as of yesterday, I had devoted some 733.4
hours to this case and my partner, Bryan G. Kolton, had devoted some 590.9 hours. (As always,
copies of our daily time records are available for in camera inspection by the Court should the
Court so desire.) Time since the filing of the fee application has been devoted, inter alia, to the
preparation of the motion for final approval, responding to class member inquiries, the changing
of the final approval hearing date and the changes to the settlement website and Settlement
Administrator’s telephone system in connection therewith. Additional time will be required to
attend and participate in the final approval hearing in March of this year, but no estimate has been
made for that nor any time included in the calculations. Billed at our 2011 rates (as noted in our
fee application, we expected to – and did – increase our rates in 2012), our current lodestar totals
some $808,830. Mr. Keller has informed me that his firm’s total lodestar, including time devoted
to the case since preliminary approval and at 2011 rates, is $287,975. Thus, our combined
lodestar as of the end of 2011 is some $1,096,805. Thus, the $1,250,000 requested in fees in this
case would result in a multiplier of less than 1.14. If our 2012 rates were used (it is standard
practice to use current rates to compensate counsel for the delay in payment), the requested fees
would result in essentially no multiplier. As with our firm’s time records, copies of the daily time
records of Keller Grover personnel are available for in camera inspection by the Court should the
Court so desire.
9. Expense reimbursement in this case is limited to $20,000 (Settlement Agreement, ¶
11.) As noted in our initial fee petition, as of that time, the combined expenses of our firm and
Keller Grover already totaled more than $22,000 and they will only go up. For instance, there
will be travel expenses in connection with the final approval hearing in March of 2012.
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DECLARATION OF JOHN G. JACOBS IN SUPPORT OF MOTION
FOR ATTORNEYS’ FEES AND EXPENSES AND INCENTIVE AWARD
CASE NO. 3:09-CV-05142-EMC
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10. In December of 2011, co-counsel Jeffrey Keller issued a press release on our
behalf, reminding the public of the filing deadline in this case. See, e.g.,
http://www.newyorkinjurynews.com/2012/01/13/Consumer-Attorneys-Reach-6-Million-Dollar-
Nationwide-Settlement-in-Payless-Text-Message-Class-Action-Suit_201201137488.html and
http://www.justicenewsflash.com/2012/01/11/consumer-attorneys-reach-6-million-dollar-
nationwide-settlement-payless-text-message-class-action-suit_201201119446.html.
11. When the final approval hearing date recently got continued, I worked with Mr.
Volner and Mr. Hamer to cause prominent notice of change of the date for the final approval
hearing to be placed on the settlement website, to see that the link to the settlement website was
put back onto the Payless.com site so that anyone would be directed to the settlement website and
its prominent notification of the change of the final approval hearing date and to make sure the
Settlement Administrator’s telephone system also contained the new information. As of the
execution of this declaration, I have personally confirmed that those changes have taken place.
12. Prior to our filing this lawsuit and prior to October of 2010 when Payless changed
its program to require a double opt-in for its texting program, our office regularly received
complaints about unwanted receipt of Payless text messages and the internet was rife with
complaints about unwanted receipt of Payless text messages. In connection with prior briefing on
questions from the Court concerning aspects of the settlement, I have previously supplied
examples of internet complaints about Payless’s texting program (e.g. Docket No. 61, Exs. A and
B). In the last year, those complaints have disappeared. I am not aware of our office’s having
received any such complaints in over a year, nor have I found any web postings that are not
extremely dated. This litigation has eradicated the problem that gave rise to it.
13. Similarly, the result of this litigation, if approved by the Court, will have a
significant deterrent effect on other companies that are considering texting programs. Invariably,
when a TCPA settlement is announced where the company is required to make a significant
payment (as here), texting advertising activity drops. I know this because the number of
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DECLARATION OF JOHN G. JACOBS IN SUPPORT OF MOTION
FOR ATTORNEYS’ FEES AND EXPENSES AND INCENTIVE AWARD
CASE NO. 3:09-CV-05142-EMC
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complaints our office receives about unwanted receipt of text messages drops significantly after
any such settlement is announced, whether by our firm or another firm.
14. Under the Court’s order and the Settlement Agreement, our firm is to be provided
copies of any objections to any aspect of the settlement – final approval of it, attorneys’ fees and
expenses, the incentive award for Dr. Kazemi or any other aspect of it. We have received no
objections, nor, after inquiry, am I aware of any other counsel’s having received any objection.
We have checked the Clerk’s docket sheet for this case, and it reflects no objection. Similarly,
while I expect that Payless will file appropriate confirmation of its compliance with CAFA notice,
pursuant to ¶ 35 of the Settlement Agreement, Payless was required to give CAFA notice in
compliance with 28 U.S.C. § 1751(b), and “at the same time provide Class Counsel with a copy of
the notification given thereunder to the appropriate federal and state officials.” On April 11, 2011,
counsel for Payless provided us with such notice.
Executed in Chicago, Illinois this 17th
day of February, 2012.
/s/ John G. Jacobs ______________ John G. Jacobs
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FINAL JUDGMENT AND ORDER OF
DISMISSAL WITH PREJUDICE CV 09-5142 EMC
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IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
MOHAMMAD KAZEMI, individually and on
behalf of a class of similarly situated individuals,
Plaintiff,
v.
PAYLESS SHOESOURCE, INC., a Missouri
corporation, COLLECTIVE BRANDS, INC.,
a Delaware corporation, and VOICE-MAIL
BROADCASTING CORPORATION d/b/a
VOICE & MOBILE BROADCAST
CORPORATION a/k/a VMBC,
Defendants.
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Case No. CV09-5142 EMC
[Proposed] Final Judgment And
Order Of Dismissal With
Prejudice
The Honorable Edward M. Chen
FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE
This matter comes before the Court on Plaintiff’s Motion For Final Approval
Of The (second corrected) Class Action Settlement Agreement. In connection therewith, the
Court has considered (a) the motion and supporting papers, including a Settlement
Agreement and Release dated as of November 16, 2010, which, together with the Exhibits
attached thereto (the “Settlement Agreement”), (b) the submission by Defendant Payless
ShoeSource, Inc. in support of the said motion; (c) the lack of any objections filed or
presented to the Court, and (d) counsel’s arguments. Based upon this review, arguments of
counsel and the findings below, the Court found good cause to grant the motion.
IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1. Terms and phrases in this Order shall have the same meaning as
ascribed to them in the Settlement Agreement.
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FINAL JUDGMENT AND ORDER OF
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2. This Court has jurisdiction over the subject matter of this Action and
over all parties to this Action, including all Settlement Class Members.
3. This Court previously gave its preliminary approval to the Settlement
Agreement. The Court hereby gives its final approval to the settlement set forth in the
Settlement Agreement, finds that said Settlement Agreement is, in all respects, fair,
reasonable and adequate to, and in the best interests of, the Settlement Class, and hereby
directs that it shall be effectuated in accordance with its terms. The Settlement Agreement
and every term and provision thereof shall be deemed incorporated herein as if explicitly set
forth, and shall have the full force of an Order of this Court.
4. The notice of the settlement pursuant to the Preliminary Approval
Order and the Settlement Agreement was the best notice practicable under the circumstances,
including individual email notice to all members of the Settlement Class whose email
addresses was available or ascertainable, the maintenance of a settlement website by the
Settlement Administrator, in-store notices in Payless stores, and notification printed on
register receipts for purchases. The Court finds that Defendant and the Settlement
Administrator carried out their notice obligations in accordance with Paragraph 4 of the
Settlement Agreement and the provisions of paragraphs 8-10 of the Preliminary Approval
Order. Said notice provided valid, due and sufficient notice of those proceedings and of the
matters set forth therein, including the proposed settlement set forth in the Settlement
Agreement, to all persons entitled to such notice, and said notice fully satisfies the
requirements of Rule 23 of the Federal Rules of Civil Procedure and of Due Process.
5. The Court finds that the Defendant properly and timely notified the
appropriate state and federal officials of the Settlement Agreement, pursuant to the Class
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FINAL JUDGMENT AND ORDER OF
DISMISSAL WITH PREJUDICE CV 09-5142 EMC -3-
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Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1715. The Court has reviewed the
Defendant’s notices and accompanying materials, and finds that they complied with any
applicable requirements of CAFA.
6. The Settlement Class certified for settlement purposes only is defined
as all persons who received one or more SMS text messages by or on behalf of Payless
Shoesource, Inc. during the period from October 29, 2005 through October 4, 2010.
Excluded from the Settlement Class are those persons who have submitted valid and timely
requests for exclusion pursuant to the Preliminary Approval Order and the notice provided to
Settlement Class Members in accordance with the provisions of the Preliminary Approval
Order. Annexed hereto as Appendix 1 is a schedule of one person excluded from the
Settlement Class.
7. Subject to the terms and conditions of the Settlement Agreement, this
Court hereby dismisses the Action on the merits and with prejudice. The dismissal of
defendants Collective Brands, Inc. and Voice-mail Broadcasting Corporation (“VMBC”),
previously designated as without prejudice in the Preliminary Approval Order, is herewith
made with prejudice.
8. Upon the Effective Date of this settlement, the Class Representative
and each and every Settlement Class Member who has not timely filed a request to be
excluded from the Settlement Class or who has rescinded a previous opt-out request
pursuant to the Settlement Agreement, their respective present or past heirs, executors,
estates, administrators, personal representatives, legatees, agents, predecessors, successors,
assigns, parent companies, subsidiaries, associates, affiliates, officers, directors, managing
directors, principals, partners, members, employers, employees, agents, consultants,
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FINAL JUDGMENT AND ORDER OF
DISMISSAL WITH PREJUDICE CV 09-5142 EMC -4-
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independent contractors, insurers, attorneys, accountants, financial and other advisors,
investment bankers, underwriters, lenders, auditors, controlled and controlling persons and
any other representatives of the foregoing persons or entities (the “Releasing Parties”) shall
be deemed to have released and forever discharged Defendant Payless Shoesource, Inc. and
its parents, affiliates and subsidiaries, their predecessors and successors in interest, and any
of their heirs, executors, estates, administrators, assigns, associates, employees, agents,
consultants, independent contractors, vendors, insurers, directors, managing directors,
officers, partners, principals, members, attorneys, accountants, financial and other advisors,
investment bankers, underwriters, shareholders, lenders, auditors, investment advisors, legal
representatives, and persons, firms, trusts, corporations, officers, directors, other individuals
or entities in which Payless Shoesource, Inc. has a controlling interest or which is related to
or affiliated with any of them, including but not limited to Collective Brands, Inc., and
Payless ShoeSource, Worldwide, Inc. (the “Released Parties”), of and from any and all
actual, potential, filed, known or unknown, fixed or contingent, claimed or unclaimed,
suspected or unsuspected, claims, demands, liabilities, rights, causes of action, contracts or
agreements, extracontractual claims, damages, punitive, exemplary or multiplied damages,
expenses, costs, attorneys’ fees and/or obligations (including “Unknown Claims” as defined
in the Settlement Agreement), whether in law or in equity, accrued or unaccrued, direct,
individual or representative, of every nature and description whatsoever, whether based on
federal, state, local, statutory or common law or any other law, rule or regulation, including
the law of any jurisdiction outside the United States, against any of the Released Parties,
relating to or arising out of any fact, transactions, events, matters, occurrences, acts,
disclosures, statements, misrepresentations, omission or failure to act relating to the alleged
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FINAL JUDGMENT AND ORDER OF
DISMISSAL WITH PREJUDICE CV 09-5142 EMC -5-
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sending of SMS text messages to persons by or on behalf of Payless Shoesource, Inc. from
October 29, 2005 through October 4, 2010 that were or could have been alleged or asserted
in the Action relating to such text messages. “Released Parties” also means VMBC, its
parents, affiliates and subsidiaries, their predecessors and successors in interest, and any of
their heirs, executors, estates, administrators, assigns, associates, employees, agents,
consultants, independent contractors, insurers, directors, managing directors, officers,
partners, principals, members, attorneys, accountants, financial and other advisors,
investment bankers, underwriters, shareholders, lenders, auditors, investment advisors, and
legal representatives. Plaintiff and all Settlement Class members who did not properly
request exclusion are deemed to have released and discharged Defendant Payless
ShoeSource, Inc. from all released claims under the agreement, and are further barred and
permanently enjoined from asserting, instituting, or prosecuting, either directly or indirectly,
these claims; provided, however, that nothing herein is meant to or shall release any claim
anyone may have against VMBC concerning any text messages other than those that are the
subject of this Action that VMBC sent on behalf of Payless or any other entity that is under
common ownership or control of Collective Brands, Inc.
9. The Settlement Administrator will issue a single Merchandise
Certificate to each Settlement Class Member who submitted a timely Approved Claim form
as provided in the Agreement.
10. The Court approves the payment by Defendant of attorneys' fees in the
amount of $_________________________ and costs and expenses in the amount of $
_________. The Court finds and determines that such payment of attorneys’ fees and
expenses is fair and reasonable and consistent with Ninth Circuit fee jurisprudence. See, e.g.,
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FINAL JUDGMENT AND ORDER OF
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Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir. 2002). Such payment shall be sent by
wire transfer in accordance with the provisions of Paragraph 11 of the Settlement Agreement.
11. The Court approves the payment by Defendant of $__________ to
representative plaintiff Mohammad Kazemi as an incentive award for taking on the risks of
litigation and helping to achieve the results to be made available to the Settlement Class, in
accordance with the provisions of paragraph 12 of the Settlement Agreement. The Court
finds and determines that such an award is fair and reasonable. Such payment shall be sent
by check to Class Counsel in accordance with the provisions of paragraph 12 of the
Settlement Agreement.
12. The Parties shall bear their own costs, expenses and attorneys’ fees,
except as otherwise provided in the Settlement Agreement and this Order.
13. This Court hereby directs the entry of this Final Judgment and Order
of Dismissal With Prejudice based upon the Court’s finding that there is no just reason for
delay of enforcement or appeal of this Final Judgment and Order of Approval
notwithstanding the Court’s retention of jurisdiction to oversee implementation and
enforcement of the Settlement Agreement.
14. This Final Judgment and Order of Dismissal With Prejudice, the
Settlement Agreement, the settlement that it reflects, and any and all acts, statements,
documents, or proceedings relating to the Settlement Agreement are not, and shall not be
construed as, or used as an admission by or against Defendant of any fault, wrongdoing, or
liability on Defendant’s part, or of the validity of any Claim or of the existence or amount of
damages.
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FINAL JUDGMENT AND ORDER OF
DISMISSAL WITH PREJUDICE CV 09-5142 EMC -7-
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15. Without affecting the finality of this Judgment in any way, this Court
hereby retains continuing jurisdiction over, inter alia, (a) implementation, enforcement, and
administration of the Settlement Agreement, including any releases in connection therewith;
(b) resolution of any disputes concerning class membership or entitlement to benefits under
the terms of the Settlement Agreement; and (c) all parties hereto, for the purpose of enforcing
and administering the Settlement Agreement and the Action until each and every act agreed
to be performed by the parties has been performed pursuant to the Settlement Agreement.
Dated: __________________________, 2012
Enter:
_________________________________ United States District Court Judge
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FINAL JUDGMENT AND ORDER OF
DISMISSAL WITH PREJUDICE CV 09-5142 EMC -8-
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Appendix 1 to the Final Judgment And Order Of Dismissal
PERSON EXCLUDED FROM THE SETTLEMENT CLASS
Marianne R. Freitas, Connecticut
It is so ordered, this ______ day of ______________, 2012.
Enter:
_________________________________ United States District Court Judge
Case3:09-cv-05142-EMC Document84-3 Filed02/21/12 Page8 of 8